Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2020, Gilead Sciences earnings Conference call.
At this time all participants are in listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised the todays conference is being recorded.
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It is now my pleasure to introduce senior director of Investor Relations, Doug, Let's say.
Thank you Andrew and good afternoon, everyone just off the market close today, we issued a press release with earnings results for the first quarter Twentytwenty.
The press release, some detailed slides are available on the Investor Relations section of forgive me out website.
The speakers on today's call will be Danilo day, Chairman and Chief Executive Officer.
And Andrew to can pin Chief financial Officer.
Also on the call will be Joanna must see a chief commercial officer, My Dad policy, Chief Medical Officer, Christy show, Chief Executive Officer of Kite, and Diana brain odd SVP and headed but HIV and emerging viruses therapeutic area.
Before we begin with all prepared comments, let me remind you that we will be making forward looking statements, including risks and uncertainties related to the impact of the cobot 19 pandemic flu gilliat fitness and results of operations.
Plans and expectations with regard to products product candidate financial projections and the use of capital.
In 2020 financial guidance, all of which it involves certain assumptions risks and uncertainties.
Owned or controlled and could cause actual results could differ materially from the state.
A description of these risks can be found in earnings press release and on latest FCC disclosure documents.
All forward looking statements are based on information currently available to kill Yaki and Gili and assumes no obligation to update any such forward looking statements.
Non-GAAP financial measures will be used to help you understand the company the underlying business performance.
The GAAP to non-GAAP reconciliations are provided in earnings press release, that's well it's on the Gilead website.
Now I'll turn the call over to Dan.
Thank you very much Doug and good afternoon, everyone well you can imagine send an extraordinary week for Gilly I'd given a terrific news on our investigational anti viral drug run distributor.
The new shared yesterday that the data show that potential Lebron disappeared help ease some of the burden of the pandemic.
The outcome that we had all hoped we'd be possible.
We're incredibly humbled to think about what this news could mean for patients in communities.
I'd like to start by sharing my thanks to everyone, who has helped to bring run disappeared to this points, including all those involved in a collaborative clinical trial the trial investigators government hospitals.
And above all the patients who participated.
I want to acknowledge our internal teams that have been working day and night on rent this severe for the past three months.
In many years of research long before the outbreak began.
Because of their run disappear news the original focus for today's call is somewhat shifted I'm sure you have a lot of questions on the results and the next steps.
We'll provide an overview of what was the strong first quarter for Gilliat, but with an abbreviated set of opening comments or we can be more time for questions.
I'll speak briefly about the corridor and run disappear before turning to call over to Andy to discuss financial details and the impact of Cobot 19 on our business.
As Doug noted in the opening Christie Joanna her dad, and Diana joined US today to answer your questions at the end of the call.
Good idea has been built to withstand significant challenge.
There was a short term uncertainty for all of US about the solid foundation. The Gilead has laid over the past 30 years and our focus on transformational therapeutics give us confidence in the long term durability of the business.
We'll do our best to provide you with a clear picture of where we are and what we expect as far as the near term impact of cobot 19, while acknowledging that as we all know.
These are uncertain times with many unknowns not leased up which is how long that the dynamic will last.
So turning to the quarter I'll use the framework, we introduced to the started the year with a three pillars that will shape our future.
Strong core business.
Our internal pipeline.
And supplemental growth opportunities that are being enabled through our strategies.
Our performance in the first quarter demonstrated the strength of our foundational business once again with double digit growth in HIV.
We reached and in fact exceeded all of our targets.
Revenues for HIV franchise were up 14% year over year.
This was driven by both treatment and prevention as big targeting remains the number one prescribed HIV regimen in the U.S. during the quarter and approximately 38% of individuals on Prem are now taking disco beat.
What I would say in general about where we stand and HIV as this.
We're very confident and younger lighting competitiveness of our products and our position as a leader in HIV.
Completing the picture in our core anti viral business, we saw sustain revenues from our HCV franchise in the last quarter.
Since the introduction of authorized generics in the U.S., we've regained market share and now hold around 61% of share through a segment and gilliat.
So moving from our core business to advancing our pipeline I'll provide just a brief overview.
More detailed information is available as part of our first quarter earnings materials in the Investor relations sections of our website.
Phil gotten up as you're aware is under regulatory review in the United States, Europe, and Japan at some potential treatment for rheumatoid arthritis.
Our teams are preparing for a competitive lunch and remain in close contact with regulators to understand the effect cobot 19 could have on review timelines.
In HIV, we made progress across our pipeline sharing important data at the virtual CROI conference with our innovative long acting anti viral and HIV cure programs reinforcing our long term commitment to people living with HIV.
In cell therapy, the FDA accepted type B.L.A. for Capex 19, as a treatment for relapsed and refractory mantle cell lymphoma.
During the first quarter and granted priority review designation.
As you might recall the European medicines agency validated our obligation in January.
This represents really important progress patients with relapsed refractory mantle cell lymphoma rare form of non Hodgkin's lymphoma.
Our need of new therapies.
Approved tight would be the first company with two cell therapies on the market.
So I touched on our strong core business and advancing our pipeline now I want to say a few words about the work we are doing to expand our pipeline through business development, including of course, the acquisition of 47 completed earlier this month.
High Bar ended our business development efforts were focused on clinical stage assets such as my growling.
Which we gain is a part of this acquisition.
We're working to integrate the teams in the programs a joint effort, which I'm, leading with Mark Mccamish, the c. or 47.
With the objectives are keeping things moving smoothly with <unk> and defining a working mom that supports continued innovation.
Next month, researchers will present data on our next generation cancer therapies virtually at ASKO, including the girl amount, but a number of abstracts that highlight the kite cell therapy portfolio.
The presentations that ASKO underscore the strength of our scientific approach and a mute on Caliente and we look forward to sharing this latest research.
Yeah, I'm 47 or business development team remains as active as ever.
The last month, we've been out three partnerships.
Aberration with second genome to identify biomarkers and potential new drug targets and inflammation.
Licensing agreement between type antenatal bio covering a dual targeting card t. therapies.
And a three year collaboration with uncle and aid to discover cancer immunotherapy.
Overall, we've continued to maintain our momentum and I'm pleased with all the progress you've made this quarter.
Well now turned to run disappear. The study results shared yesterday from the randomized placebo controlled phase three and I.D. study and from our own open label page three simple studying patience with severe disease are important progress as we seek to understand the role that rim disappear might play an easing the burden.
Of coven 19 around the world.
These trials are part of a suite of clinical trials investigating the effects of run disappear. We designed the clinical research program to ask multiple questions in parallel including watch groups of patients are most likely to respond.
And when to treat and for how long.
Various study designs were used from placebo controlled to open label to answer very specific questions in each case.
We expected that the answers would emerge around the same time and the taken together they would form a clear picture of how Rem disappear.
Best be used for patients.
Yesterday, we answered important questions with the initial results of the N.I.D. trial and simple trials.
The N.I.D. data demonstrated the patience with Cobin 19, who received runs a severe recovered faster and similar patients who received placebo.
The results from the Gilliatt sponsored simple study address a critical question about dosing.
The data from the first of the simple studies showed similar clinical improvements in patients with severe symptoms uncovered 19.
Regardless of whether they received five or 10 days of treatment.
The ability to shorten duration for severely ill patients is very important and means patients can go home earlier hospital resources can be freed up and it has a positive impact of course on our supply.
We had calculated having 1.5 million doses by the end of May I'm out seemed to 140000 treatment courses at a 10 day treatment duration.
<unk> simple studies suggest we may now be able to significantly increase the number of course is available with a five day treatment duration for certain patients.
We announce previously we are donating our entire existing supply.
Frankly, because this is the right thing to do at this time and the human health need in the pandemic.
As you know we'd been ramping up production since January we've significantly reduced lead times and expanded our global network of partners.
As additional raw materials come available will have an exponential increase and supplies towards the latter half of this year.
We hope to produce enough supplied to treat over a million patients by year at.
You're also working to build a global consortium of pharmaceutical <unk> chemical manufacturers to expand global back capacity and production.
It will be essential poor countries to work together to create enough supply for people all over the world and we look forward to these collaborative efforts.
Or access and allocation will work closely with governments and health care system to provide access we intend to allocate or available supply based on guiding principles that aims to direct global access for appropriate patients in urgent need of treatment.
We recognize there's a lot of work left to be done it a long way to go and finding medical solutions to end the pandemic and will continue to work with regulatory authorities and the best path forward from under severe.
At the same time all of US have gilliatt are relieved and grateful that our efforts on rubber disappear of love to let this important progress at a time when we all need a beacon of hope.
Before I turn the call over to Andy I Wanna <unk> reiterate how grateful we are for the partnership with many groups outside Delia to support the work on run run disappear.
Collaboration throughout this pandemic has been critical.
Sounds like we lost.
I'll just finish is.
Oh finished his commas, we also want to say how proud we are the where employees have demonstrated such dedication to the meeting the needs of patients those with Kobe 19, as well as those with conditions, including H.I.V. viral hepatitis in cancer, who depend on us for their medications.
So with that I will turn to our financial comments and then we'll moved acuity.
Good afternoon, everyone. My name's 80, they can sit on the company. So before I started I'd also like the knowledge the incredible work of our 12000 employees and what they're doing during these challenging times their dedication and resilience is really inspiring.
In addition from the outset I'd like to emphasize that our core business is very strong durable and provides a solid foundation to navigate the current environment.
We continue to have confidence in 2020 and beyond.
The pandemic has not diminish that view at all we remain confident in our long term outlook.
I liked the first briefly share some commentary on are very strong first quarter results and I'll remind you that the earnings materials posted it on our website contain all of the details including plundered color on the impact of covert 19 on our business today.
As well as our preliminary expectations for the coming months.
We are happy to walk through the results and the impact of covert 19 on our business the date.
Detail during that you would a session.
[noise], starting with our revenues for the quarter total revenues for the first quarter were 5.5 billion with non gap earnings of one dollar in 68 cents per diluted share. This compares to revenue a 5.3 billion with non gap earnings of 1.1 dollar and 67 sons.
Share for the same period last year.
Product sales for the first quarter were 5.5 billion down 6% sequentially and five per se year over year.
I'd like to call out that we believe approximately 200 million of revenues were pulled forward into one primarily for H.I.V. franchise due to the coven 19 pandemic across the U.S. in Europe.
This was the result of payers pharmacies, providing greater access the medicines by allowing 90 day refills and in some cases early refills among other operators, we expect us to reverse itself out over subsequent quarters.
Now turned into our expenses non gap or in the expense was 1 billion for the quarter up 8% compared to the same period last year.
Rarely due to the ramp up ramdev severe including manufacturing scale up and clinical trial class.
Nongaap S.D.N.A. expense was 1.1 billion.
Foreperson compared to the same period last year, primarily due to higher promotional expenses and the United States related to our H.I.V. products.
As the one highlighted we completed our acquisition of 47 this month.
We currently expect to incur approximately $120 million expenses. This year related to 47, primarily in research and development.
In addition, I'd like to highlight the the acquisition qualifies as an asset acquisition and as a result, we currently expect to incur approximately $4.8 billion in gap Orange expense, primarily related to in process research and development.
Turning to our strong balance sheet during the quarter, we generated 1.4 billion in cash from operations. We ended the quarter with 24.3 billion in cash and marketable debt securities, we repaid 500 million of debt.
Cash dividends of $874 million and repurchase 19 million shares of stock for $1.3 billion.
I want to know that we paid approximately 4.9 billion and cash upon closing a 47 in April.
Are strong balance sheet and discipline to allocation of capital has positioned us to continue to grow and build our business, despite hertz environment and associated risk.
We remain very confident in the durability of our business and expect to generate significant operating cash flow during 2020.
I'll turn out to covert 19, and its impact on our business.
Like others, we have anticipated that there could be a short term financial impact to our company into the sector as a whole.
We continue to carefully review our results to assess the potential magnitude of that impact.
Towards the end of the corridor ended April we did begin to see some effects on our business, primarily as fewer patients access health care and the number of new starts in H.T.V.N.H.I.V. prevention again to slow.
However to date.
Overall effect on our business has been models and it remains unclear what the ultimate impact will be.
Given the significant uncertainty regarding the duration of the magnitude of the Coven 19 endemic we are actively planning for a number of scenarios and we'd like to focus on our Bayes case assumptions today, which we are making from data drawn from a number of sources, including epidemiologist economists in public health officials.
First these base case assumptions suggests the pandemic will peak between March in July.
We would point the recent data from Johns Hopkins, which show trends, reflecting a slowing of the rate of new cases since late March in the United States in a declining number of new pays is in some critically affected regions of the world.
Second if the virus returns in the fall or winter the impact will be lessened due to preparedness and hopefully you get emergence of therapeutic including potentially our own room destined beer.
Third the global economy will begin their recovery late in Q2 in a return to the pre covert dynamics will be underweight a year and.
We have of course considered x. turtle views that anticipate more or less favorable scenarios, but we believe this best This base case provides the best Foundation at this time to plan in this on certain situations.
Let me share a few qualitative perspectives on potential business implications of this scenario.
Please bear in mind the forward looking statements disclosures, we shared at the beginning of the call.
I'd also like to highlight again that we have added significant commentary throughout the investor presentation that focuses on our website and we would encourage you to review those materials.
There are three key take away from our perspective.
First we had a very strong corridor.
<unk> to date impact on our business has been models.
And third we remain very confident in our long term outlook.
That said on the commercial side, driven by lesson healthcare provider access and fewer patients visit visit we may see revenues adversely impacted in q. too and potentially be on.
This would likely be different across our franchises with R.H.T.V. franchise disproportionately affected due to the acute need hair nature of the therapy.
We believe that the majority of any revenue decrease in H.T.V. revenue due to the pandemic could be recoup in a warehousing type effect later in 2020 or ended 2021.
It H.I.V. early signals suggested switches.
For treatment and prevention pay spent maybe impacted by covert 19 as people differ healthcare visit.
Specifically in April we are observing reductions into scoby for prep initiation and lower switch volume.
Crap refills may also be affected but it's still too early to fully understand any trends here.
In contrast are HIV treatment business is less likely to be significantly impacted as we believe patients will continue to prioritize refilling their prescriptions and access their physicians through tele medicine.
In cell therapy reduced access to authorize treatment centres could unfortunately result in critically ill patients, having access challenges, which would impacted business.
Turning the clinical development like many others in our industry, we are pausing enrollment for most trials.
Exception to this is studies were patient outcomes are critically impacted such as our such as trials of R.H.I.V.. That's it inhibitor in heavily pretreated individuals who a few other treatment options and some of our pay programs that have enrolled patients with cancer, who are critically ill.
Enrollment in these studies is at the discretion to the investigators.
Overall, we expect reduce clinical development expenses in the short term.
In addition, the dynamic could lead to delays and potential approvals for pipeline assets over the longer run.
With challenge brings opportunity to help and is Dan described earlier, we are excited by emerging results <unk> as a potential therapy for covert 19.
As we ramp up further development in manufacturing of Ramdev severe we will incur additional costs beyond those four cats. The beginning of the year. The magnitude of this investment is dependent on to continue to evolution of the data the duration of the pandemic and other factors.
The potential range of this investment for 2020 is up to $1 billion in the accounting treatment of this investment is dependent upon a number of factors, including potential regulatory approval.
Were authorized by regulatory authorities guilty I'd will focus on making room definitely are both accessible and affordable to governments in patients around the world.
Given that continued uncertainty in the trajectory of the pandemic and in Ram definitely clinical data, it's premature to define what the right post donation business model is to create a sustainable longterm supply for global needs.
In the context of a strong underlined business and Q1 results. We will continue to monitor the situation and expect to provide additional insight in outlook on our Q2 earnings ball.
I'd like to close by thanking our team for their extraordinary efforts in for delivering a very strong first quarter. During these challenging time.
We can now turn the call over to your day operator.
Thank you.
As a reminder, ladies and gentlemen to ask a question you will need to press star one on your telephone.
To withdraw your question press the pound key.
Please stand by while we compiled a Cuban a roster.
Yeah.
And our first question comes from the line of Michael you with Jeffrey's.
Much.
<unk> and if you're there <unk> <unk> <unk> <unk> <unk>, yeah, I'm back off my questions Yup.
And so my question is for you guys on <unk>.
Kline can you just describe the inputs into how to think about what revenue and.
To the positive <unk> can have this year.
Well what are the D.N.X. on that input into that.
Expenses you guys we <unk>.
Sky and you kind of walk through that you described to <unk> <unk> <unk>, maybe just walk through the inputs to air and how to think about why would it be on the level.
And and comment on that because it makes the model.
<unk> <unk> <unk> <unk>. Thanks.
Thanks, Michael appreciate the question and and sorry, guys that I got cut off their before thanks, Andy for picking up the only thing I wanted to conclude with my comments is probably the most important commented so really thank the a colleague throughout the that are working or disappear and non rendered through your project to like they really kept the momentum going in court or one of them.
Humbled and proud to be working with him. So Michael Thank you for the call you know on the on the revenue side.
It is just Andy mentioned also mentioned, it's too premature you know, there's there's a lot of moving parts right now our focus will be on making sure we come up with a sustainable model and then allow us to provide rum disappeared a patient's around the globe that.
That you know is intent on providing access and affordability. We're just now you know going through the clinical data that the man scenarios. The regulatory approvals. All these things are essential for us to into put inputs into our plan about how that will work postal donations.
So so we can't really get more insight into that at this stage, but certainly when we can we will not on the expense side. Andy I mean, obviously you you had mentioned already that up to a billion and I'm clear on how to your account team will occur, but perhaps you want to add something else to Michael's question.
Sure Michael you know at this point, it's too early to tell you, where that's going to fall in the P.N. out there and number of scenarios. It could those expenses could fall into cost of goods sold as you know they could be aren't expenses in some scenarios Oh, you know a portion of them could also be S.G.N.A. expensive so at a high.
Level. The the expenses that we're referencing is you would expect come from manufacturing predominantly into a lesser extent clinical trials.
And I think that's our best best Good faith estimate at this time based on what we know in terms of the expenses that we see is the ramp up over the year and we'll do everything weekend and provide more <unk> more color and commentary in particular on or or Q2 earnings call.
I I appreciate it you know up a billion of expenses and not knowing anyone have any <unk>. It's an interesting <unk> prepared to thank you.
My cool.
<unk>.
Certainly our next question comes from the line of Cory Kasimov with J.P. Morgan.
Hey, good afternoon, guys. Thank you for taking my question want it to also ask on Ramdev severe no surprise.
It was wonder if you could talk about the formulation work that's underway to potentially developed an oral and or in inhaled version of the product like how far along might you be on this front and and when can we expect to see something more there.
Yeah, Thanks, Korea, I'll start out and maybe others on call went to add but you know our our focus as you can imagine since January who's been on ramping up the supply, particularly so that we have.
<unk> version, that's appropriate for Port intravenous administration, the clinical program all of that so that's really going to be banned at the same time, though we we have had a team just as with everything with this program, including supply. We've had teams that have been really since the very day one in January.
Already been focusing on success and so if successful what you know how else could we potentially develop this medicine I think that's been taken into account from the totality of the clinical trial program looking at both you know critical severe and moderate patients, but likewise, we've done the same thing with all other alternative delivery mechanisms presuming success.
That might make it more convenient for patients are allowed us to broaden the patient group they could benefit from a successful anti viral.
And that work is you know as you can imagine still early but we can't say a couple of things. It's not the this particular Madison because it's heavily <unk> first pass metabolize liver, there's not really appropriate as an oral formulation, we've known that for for.
Yeah, it's probably a decade, but we are looking into things like subcutaneous formulation and potentially inhaled formulations.
And although it's too premature to give you time lines on that rest assured that we are we've been actively working on soon as soon as we can give some time lines, we will to see a now, particularly because of the advocacy that we've seen this week will continue to pursue those were the great sense of urgency.
But timeline is a little premature or just know that we've been working on it now for several months.
I don't know my dad, if you want to add anything or you're kind of good my dad's. Okay is that okay. Corey I know you need more but we'll give you more as soon as we can no fair enough appreciates answering the question and good luck with continued progress here.
Thank you card.
Thank you and our next question comes from the line of Brian Abrahams with RBC capital markets.
Hey, guys. Thanks for taking my question two questions on the index fair, if I could and appreciate all the work that you got your doing to bring this treatment to patients first off on the NIAD study can you give us any sense of the proportion of patients who are involved in the interim is there any additional update.
And we should be expecting that could be a dating factor do availability and your level of confidence that differences in baseline risk factors I didn't influence those results as may have happened in the China study and then just secondly related to supply any particular subsets of patients across the studies, where you maybe seeing the most comfortable benefits he might consider working with regulators to direct the aging too while you're scaling.
Thanks.
[noise] yeah. Thanks crime, sorry, just be clear on your second one related to supply you said is there any subset of patients can you just complete that one more time.
Yeah, any subset of patients where you might be seeing more benefits more often will benefit to cross the study where you might consider working with regulators to try and direct the agent to initially as supply gets a life in terms of like an allocation, yeah with limited allocation or or limited exactly yeah got it got it okay.
Okay, I'm going to turn it over number dad and all that my dad.
Take a stab at both of US Please hi, Brian on the first question I'd. There's <unk> on the first question, we have not seen a lot of the baseline demography and the sorts of data that would help in terms of answering your question on that on the NIAD study so.
I think we're we're all going to have to wait for those data.
To to get published in yet.
Put out for US all to review so I think that that's pending and what will look for that to come out.
Terms of patients subsets I think our our data.
And.
If you look at who's been enrolled in the trials overall I think you know we're clearly looking at the hospitalized patient population and we're looking at patients who are not requiring supplemental oxygen is the primary population than we're after including those it may <unk> either become ventilated.
And they start out mechanically ventilated.
Certainly our data support that from our open label trials. The <unk> study enrolled that breadth of patients, but we have not seen subgroup analyses of the different different patient populations to give you clarity there, but we we believe it it'll be in that in that fairly broad.
<unk> early on.
Got it expert at.
Right.
Thank you.
In our next question comes from the line of Jeff Meachum with Bank of America.
Afternoon, guys just wants a great job on the whole the whole team really for the for <unk> development.
A couple of points are October 19 of you guys looked at other nukes for earlier stage patients I'm just thinking about.
<unk> I know you guys have a lot probably that is there that could be more pleasurable to you know, it's a mild to moderate patients.
And then on that's the their access is there a model to license out I.P. and our manufacturing I'm, just thinking about how to accelerate perhaps broader access outside the U.S. Thank you.
Yeah.
Yeah. Thanks, so much job for the for the for the thoughts everybody will appreciate your your your sentiments, let's start with Kobe. It any other nukes I didn't know, whether we're DAT or Daddy you want to handle that I'm not sure how you want to.
Sure I I think right now this is where it out again, Jeff. Thanks for the question right now we we do believe that <unk>, the best molecule and has the best potency against the Corona virus, you know anything we do we look out and and you know both we and others have been looking for other molecules that could have potency here, but <unk>.
Severe is certainly the most potent molecule that we have and that's our been our focus where it will certainly keep looking there <unk> you know <unk> one of the reasons. We are focused on looking at alternative formulations for Rendez severe is to address the question that you asked teaches how can we get to other patient populations, who may benefit from the.
Drug.
As outpatients for example, and I think in the short run I would I believe that that's going to be the the the best the short to medium term I think that'll be the the best approach for us to go.
And then I think your second question was about banning manufacturing right.
Yeah, So <unk>.
I mean, Andy maybe you want to do you want to take this question as well because you're leading the group on this <unk> yeah, now I'd be happy to Hi, Jeff. Thanks for your comments look on the manufacturing side I'd say a couple of things it at a high level is that again, our primary focus is on providing access impatience around the world. So.
Just like we did with our H.I.V. medicines in H.T.V. medicines. We are deeply focused on this we are we have two separate workstreams. One is working on or in turtle supply chain and making sure that we have a robust supply of starting materials intermediates and a strong manufacturing consortium built with companies.
Around the world you've seen some of the references to that and Dan C.O. letters and I would expect that will provide some additional information over the coming weeks and months.
We we do have a <unk> a second.
Workstream, where we are in discussions with with large sophisticated companies around the globe exploring the potential for other companies to help establish separate end to end manufacturing supply chains. The difficulty. There's you might imagine is the given the scarcity of some of the starting materials, we want to make sure that we don't do anything.
The impact.
Our supply chain given that bad is the quickest route be getting product to patients who needed all around the world. But we are we are looking at alternatives. It's too early to give you any specific guidance or to tell you, where we're going to land on it but we are working with a number of companies around the world that you and others no well to see what we could do together.
And if there's an opportunity to benefit patients in that way. So I'll leave it at that and then you see that's the way Dandy and appreciate your leadership there with your business development had working with manufacturing you know I I would just to add that you know we've we've we've been a student of of other of other small molecules in this type of studying whether it's tamiflu.
In the past in summer so in terms of some of the scale up and stockpiling that occurred there or students of our own work if you like within our H.I.V. portfolio between the developed in the developing world. So we're putting all that knowledge to work as we think about moving fast and wide in terms of our ability to produce supply but also.
Thinking very thoughtfully about a global footprint here, which which would allow for a this to Danny said have have different geographic.
You know Ah representation, which we think it's going to be really important so more to come on that but but we've had teams really focused on that day and night for the past several months just to give you an idea that thanks to.
Okay. Thanks.
Thank you.
In our next question comes from the line of Jeffrey Porges SBB Leerink.
Thank you very much and on top.
Comments will appreciate it over great communication as well from downtown so.
<unk> Oh off the controversial question.
<unk>.
Has generated attractive for times for investors and effective return on capital from trading hepatitis C. and potentially nearly eliminating hepatitis c. from trading HIV and turning it into a chronic disease and building a really important global stockpile.
Oh for influenza so.
So what's special about code it should we assume that the capital returns with a profitability or a providing a global treatment for coded long term. After the first two or 300000 courses provided donation basis shall we assume the returns we got to be similar to the returns that you've generated.
Other parts of the business.
Quickly can you give us an update on <unk>.
County lost this on a virtual basis, what do you expect to be out of a virtual basis by the time that approval.
Terrific. So Joanna I'll, let you handed the forgotten that but let me start with your first crashing Jeff and thanks.
Yeah, and then obviously we are conscious of the fact.
This is unique and this is different you mentioned some parallels to H.I.V.H.C.B. even tamiflu.
But there's been no other time like this in the history of the planet than any of US have been alive in terms of the far reaching effect of this pandemic.
Medically from a patient perspective, and most importantly, but also economically and so I think there is no guidebook out there. There is no rule book out there other than that we need to be very thoughtful about how we can make sure we provide access or a medicine to patients around the globe and do that and this sustainable.
Away for the company for U.S. shareholders.
And we we acknowledge that and so points well taken and I I I I would I guess the short answers your question is.
Don't think there was a precedent for this and so we we we understand or our responsibility and we understand the responsibility to ride you different audiences as we approach. This so we'll be working back with you and will certainly be getting feedback from different individuals as we as we evolved as soon as we understand more data around this but rest assured.
We understand our responsibility, but that I'm going to turn it over to Joanna pleased to talk a little bit about forgotten them.
Sure.
I think just a quick update aren't.
We we basically have hired Oliver.
No commercial medical standpoint, I mean, <unk> your leadership as well and.
Situation really closely to be honest thinking you're because that'd be really no <unk> <unk>. What can you normally not again and so we're just kind of monitoring that and planning for success to be honest that you can make sure that we are ready four lines like a second half 2020 across all our marketing wherever you look at.
<unk>.
Yeah.
I think I'm, a virtual a large standpoint I think.
Things that we're looking at an scenario planning and we haven't made.
That'll be me to see the timing of this pandemic, having said that.
But a lot of our teams, arguing virtual right now and many of the market, arguing remote be telling virtual speaker programs et cetera, and and working through this environment site and obviously the architect and patient not cat not being open at that point in time, because we're working through all that and looking at the get married.
I think we need to know a little bit more information on a tiny.
Pandemic and how that plays out to wipe the articles here.
Great. Thanks, very much the answers.
Thank you Joe.
Thank you.
In our next question comes from the line of Matthew Harrison Morgan Stanley.
A great. Good evening, thanks for taking the questions and thanks for all your work with Ramdev sit here I'm going to ask to on H.I.V.
Well <unk> can you just talk a little bit about prepped conversion with Descovy I think you said you're at 38% in which is actually fairly close to the the target you guys were talking about you know do you think you can do better than that or not this year and then I also noticed in the back of the size you were talking about a long acting <unk> that you're putting in the clinical studies maybe.
Could comment on that thanks.
Terrific. Thank you so much Matthew for the comment so Joanna Yeah, why don't you start and perhaps Diana can on the on the developments fine.
Okay, great. Thanks to the question that so H.I.B. <unk> of course, another quarter solid corner again, if you're if the eight consecutive quarter of <unk> routes and not obviously you turn it inside though it's street names and.
<unk> next to your question.
Yeah. So we just <unk>, 38% and the tracking exactly to our plan right. We had said anywhere between 40% to 45% <unk> are we feel confident with that number.
Obviously of Andy mentioned <unk> <unk> opening comment there has been a little better to slow down in front of switch standpoint in the market for obvious reasons, because patient are not going to there.
Okay back is modest that's far and we think a lot of them smoking able to be <unk> here when the pandemic that last week Bureau.
Confident that yeah. We think we're we're going to be in the range of the 40 45 that we have recently cut out and maybe even.
Now if all goes well and we can get out of depend on a computer barely or maybe a little bit north of that.
You know Diana maybe she'd have to long asking.
Yeah, I'd be happy to.
Hi, Matt so.
As you probably know where really pursuing multiple shots on goal for developing a partner for cats. They didn't have better we're looking at molecules the class different classes and part of that is looking at the integration have their class and we've got really what's the best in class.
Ideal integration have better right now with the Cat grew up here and so we've one of our starts has been in formulating that such that it could be a long acting and Jack the ball and not potential sort of first generation partner for our caps you didn't have better like made a lot of progress as you know it's got great formulation came here.
And where I never just getting not into the clinic now most face mine centres globally rarely have been shut down our pause sell the timing, there's a little bit on certain I thought were ready and helping type data by the M.B. or.
Great. Thank you Diana So why don't we go to the next question. Thanks Man.
Our next question comes from the line of Omar Rafat with <unk>.
Hi, Thanks, so much for taking my question, then we really admired gilliatt that first during the pandemic ended the drug donations et cetera, but as we go beyond that it does seem like there will be a commercial business in the broader coed landscape and I don't want to pay you to a dollar number but I do want to ask this do you envision.
Gileads product offerings for a covert being beyond <unk> for example, P.I. combination and or even partnering with vaccine companies of sorts I I'm just trying to understand how you envision this category for daily at if I may and Mehrdad. If I'm ask you a quick two part question first you have a certain lung concentration.
In mind that you're targeting and is that much less than the 20, Mike them. All those those laid out in the new England Journal paper and and do we have any data from human on what lung concentrations are we actually seeing with them desk severe what the devil steps in the clinic. Thank you so much.
Thank you. Thank you for your comments. Thank you for your yeah up for work Yeah getting back to you know run this severe and and how do we see this plane out over time again I'm going to have to come back to to some of the basis of what I said before which is.
You know, where we really need some time now to reflect upon a very ball tile changing situation to determine what was on a clinical side regulatory side Pandemics epidemiology, you know what the right sustainable model is rest assured the real come back to you as soon as we as soon as we can digest that in soon.
It is actually a little bit more time passes.
Which was also one of the important reasons for the donation to allow us to to to obtain more information as well about what that sustainable plan or model is but I'll just make a couple of comments on what you said and it was also record quote by Dr filed to yesterday, which is you know with D.N.A.D. results in the highly.
<unk> significant reduction in time to recovery.
Now changes the landscape you like for drug development with in a covert 19 deem that one has to know think about comparing to run disappear.
And or looking at adding to reminiscing here, which I think is exactly what the N.H. trial is going to do now and I'm sure all of our collaborators within the drug development space, we'd have been working with them, we're going to continue to work with them on the most thoughtful hypotheses around how we might be.
Sit or just you know one reflects upon the H.I.V. building you know.
Decades ago.
That run disappeared become kind of the base therapy, and one books to try to improve symptomology improvement mortality improvements expanding patient population and so that is yet another factor that will go into how we how we determine how best to to create a sustainable solution.
<unk>, but clearly all those things we have been thinking about and now we have to accelerate now that we have these trial results. So more to come on that I will have my dad you answer the lung question, if you could place Vermont.
Yeah. Thanks, Dan <unk>, we're so what I would say is the concentration that we're looking for is you know are we think are you see 50 and human cells is in the tens of Nanomolar range and we know our serum concentration gets in the micro smaller range.
And so we should be more than adequately covered when by cheating those levels with the current dosing paradigm that we have probably by an order of magnitude or two.
And certainly in the <unk> and based on model data in nonhuman primates as well as mice.
We see more than adequate concentrations getting into the lung those those animals and invivo advocacy in those animals and I think.
The clinical benefits were seeing suggests that that that's exactly what what's happening in in humans as well.
So I think I think we're pretty comfortable with where we are in terms of both dosing and exposure including in Milan.
<unk>.
Thank you very much.
<unk>, Okay. The next question, but.
For next question comes from the line of a leaf you young with Cantore Fitzgerald.
Hey, guys. Thanks for taking my question. Thank you for your contribution in solving the world's problems, maybe just one and a half for me.
Were you surprised it just with the severe kind of working as a dead, but an anti retroviral did you kind of think that you might need to have people kinda earlier.
The virus for it to work and do you think it works better there and then the second question. It's just a little bit around H.I.V. are you seeing five hours channel changing and the public market. So like the Medicaid the prisons et cetera et cetera. Thanks.
Huh.
Yeah. Thanks enough Bloodedly P. again for your comments I'm going to turn the first question over to my dad in the second one over the Joanna but just as I do on your first question.
And I think my dad can fill in the details here, but you know there's been a surprising consistency.
<unk> all the different data elements in our clinical program from compassionate abuse to interrogating, where we know about the China trial to the severe trial to the N.I.D. trial and I think that is maybe not something that's completely well understood out there and you know I think my dad is a part of your response Ah I think it'd be helpful.
For you to.
Reflect upon out as well if it's okay.
Yeah. No of course, you know I think a leave here we all we're using the parallel construct of influenza for our thinking around <unk>, which was you got to get in really early given the viral kinetics.
Influenza and getting into late probably won't have much of an impact and I remember an investor call. A couple of months ago, where I said that as well and that would certainly our expectation.
However, the the wildcard here and what I think we're still learning is what are the bio kinetics in in patients with this virus how long how long does that last and and how quickly does it go up and how quickly can we have an impact on it. So I think the data are the data essentially we're seeing.
Advocacy across both patient populations, but also across trials that are really all tracking in the same direction is is Dan alluded to so even if you look at the China data hazard ratios for a improvement are consistently positive.
The study was under powered and I think the hazard ratios will probably see from the nine study are gonna be in the same ballpark, but.
But with the inappropriate sample size, they're highly statistically significant.
Same similarly, I think when we look at the mortality data and when we look at all of those different factors. This virus seems to be behaving differently.
Severe seems to be having advocacy and relatively broad patient population.
And so I think you know we're learning as we go we'll learn more is more data regenerated right. We have our moderate data coming up where it will be will be looking at it and even less severely ill patient population. So there'll be more data coming out in that population that that that may add to our.
Knowledge base here to understand the spectrum and as we talked about earlier understanding the cosine the sub groups in the NIAD study will be really interesting in this and and we don't have that information yet. So I think all those data will will contribute to our our overall understanding of do you need how really do you need to be in new patients who have.
Symptoms for less time do better those are certainly the trends, but there are certainly seems to be benefits even in patients who have longer duration of symptoms right now.
Maybe I ended up the Joanna for the H.I.D. question.
Yeah, I think for that W.P. I just pick up working so we have a couple of moving people in the first quarter for H.I.V. sex for now.
It's not just one can you <unk>, making good different here and so the first one is obviously the seasonal inventory right here the keys for load off and then see one drive down to that definitely happening into wine. Then we also had to work late March like I'm sure many data Wow.
That prescription number of days per prescription bright and inventories right toward the end of March.
Mixing does two things and specifically to government channels that you were asking to Bang pattern. We we do you normally see and she went a little bit more of that hire me to worth governing channels in the first quarter and that obviously not negatively impacts are <unk>, that's about it definitely happening in the first in the first cording this year.
Right. Thank you Joanna. Thank you really can we have the next question. Please.
Yes. Our next question comes from the line of Mohit Man with city.
Quick thanks for taking like question and I would also add my appreciation for your assets against Kobe 19, a quick one from my side you can has me.
She can can you please update that's on your.
<unk> displayed bought for I.B.S. as well as osteoarthritis and specifically on osteoarthritis program.
How important is did plugin yet to see <unk> see improvement in being then D.C. The data Oh for you to take a decision to opt in debt. Thank you.
Thank you might be to I'm going to turn it over to my dad, thank him or that.
Yeah. Thanks to the question really so with the I.P.F. program. There is a schedule. The interim analysis that that will be coming up early next year, and we think things will stay on track again, I'll I'll I'll put some error bars around the the pandemic, but I I.
I don't think that should be impacted at least today.
So that that'll be something that will be clearly looking forward to and and will be important to to how we proceed there.
In terms of the osteoarthritis. It's a great question, you know I think while.
Seeing structural improvement is going to be really important in interesting certainly thus far the the regulatory guidance has included looking at symptoms like pain for improvement so.
We we can push on that obviously, if we see structural improvement and we haven't been powered for example is a is you know for pain. Then we'll have to look at that and and think about what the implications of that are and discuss it with the regulator. So I think we what will be looking for his direction.
<unk> on all the endpoints that William will be measuring to make the smart decision in terms of moving moving forward with that program.
Thank you.
Okay. So let's go to the next question. Please.
Our next question comes from the line of Robin <unk> with Suntrust.
Like I think that's my question then again you know great work on all the things are going to help hope this is <unk>. So.
So you know there's a lot of talk about runs out there being approved for emergencies.
And he's clarify does that mean at that point in time versus now where it's <unk> you actually could charge for the drug.
You know when you say of Cornell does that mean positive margin for the product and left the sort of science point of view helped me understand what would it take first city strides or you're driving topic by their trucks to work in a ventilator paycheck do you think theoretically thank you.
Great. So I'll turn the ventilator question I remember it out and just a second but thanks clarify.
The the way so.
Yes, I mean under under and immerse use authorization one could.
Charge for the product we made a decision.
You know to donate 1.5 million files, which was the entirety of our supply through the early summer.
And that's for a variety of uses right I mean, that's for clinical trials as one would expect not to charge for loads of course compassionate use E.M.T. and other countries, but also available that supply for regulatory approvals around the world and and we'll allocate a cord noon. So it's regulatory approvals come on line. So yes.
It is possible to to charge I would just say that you know our goal here is to get a full approval for rubber severe we feel the data supports that and any you aid there for is a step to really a bar formulized approval.
The reason you know the agency and we are talking about that is it.
These are extraordinary times right. So so <unk> weeks would make a difference to be able to get medicine to patients by enacting anyway, that's what the F.D.A. to do prior to another form of approval and so a two step wise approach, which allows us to immediately address humanitarian need.
While still pursuing all the aspects of a normal approval, which we are we have to which we are doing with U.F.T.A.. So I think that's probably the most.
Important point and again, I, I know routing and and trust US. We we we will be answering your questions the sustainable model for him to severe.
In in the future in the near future.
We we just don't have the answers yet and we we we deeply respect and appreciate the pact.
That you know when we get into millions of doses, we have to have a sustainable economic bottled. It works here and that achieves access to and affordability to patients around the world two or more to come on that if I could turn it over to my dad and then they ventilated treatment approach.
Yeah, Robyn excellent question. Thanks, you know <unk> the the critical the critic holiday. This comes down to a timing question right. It really comes down to how long is by a replication ongoing in the lungs that patients and how quickly do patients deteriorate too meeting.
Needing mechanical ventilation certainly what we're seeing is that patients are are very very rapidly deteriorating some patients deteriorate deteriorate rate rapidly wow, and so getting them antiviral therapy in that time.
Team where.
You know it seems that there's still a viral replication going on certainly seems to be benefiting those patients and probably what's going on and this is speculation on my part is you know you by limiting the viral replication, you're going to limit the inflammation, you're going to reduce the number of people who develop lung and.
<unk> and you're going to get them out the ventilator faster. So you know the the discharge rates that we're saying where the people people are being discharged four days earlier for example in the N.I.D. study underlying that our patients who are you know d. escalating or need <unk>.
Your nation.
And and that leads them to getting onto room air more quickly and I think it. So there's a time element and all of this that I think is probably we're benefitting. These patients certainly if you talk about people who have been ventilated for you know a week or two weeks you know there the question of whether an answer viral wouldn't be.
Beneficial I I think seems more difficult to to to tie into what's going on but again it comes down to understand the borrow kinetics here and that's a work in progress I think per per all of us.
Thank you.
Thanks, a lot Robin can we have the next question. Please.
Or next question comes from the line of <unk>.
Oh.
You guys think so much for that question I ask you all my peers comments on the Great work you guys have done on room to severe.
Then maybe just one for me a high high level question here around your involvement maybe with a folks in Washington Your discussions there.
So obviously like the you know biotech for some time, it's been about you know from Washington perspective about drug price scene and the rhetoric spin off you know pretty negative I'm wondering if the rhetoric has changed at all in your view within your <unk> when you're dealing with folks there how how how it's particularly change given you guys are so <unk>.
You know from desk, if you're in the solution to covered 19.
Yeah, I think silly yeah. These are unusual times for all of US I'm sure plus and all of your.
Ah areas of interest as well as ours and so you know what I can say is the I think you know people have come together.
You know in a variety of ways and certainly that's also occurred to a certain degree in Washington and.
You know I've.
Spend a decent amount of time in Washington over the past several months.
Certainly before the shelter in place and I I think even then there is some change in the rhetoric I think.
For highly innovative research based companies that you know have immediately kind of shifted their efforts to solutions than the current a virus. That's that's pretty impressive actually to in many of the appears in the industry that I stay in very close touch with you know spared no expense to.
Pivot and shift so I think at the end of the day.
I think this will certainly help the industry's reputation I think the ability to to solve a human crisis like this because of the decades of investment in the at risk investment that's done.
You know by so many companies people I think we'll and the general public we'll we'll we'll see that and whether that's treatment treat <unk> different types and treatments for vaccines.
I think that it'll be the case, but certainly to your point I think the tone is different in Washington, I think people are very appreciative and concerned about finding solutions here and it's brought US all together, which I think is a good thing I'm not suggesting that there won't continue to be focus.
Pressure on drug pricing of course, there will be.
And we continue to work appropriately to make sure that in particular the patient that.
Are are are bearing the brunt, sometimes of some of the pharmaceutical pricing that the legislation was put into place that that supports that.
And improve that per patient and that we lean in as an industry and as a company too.
More that close through to patient so all of those principles I think still apply but it's been done now in a way.
Where we can have you know.
Appreciation for the innovation the industry brings so more to come and you know a lot lot still to happen this year with the election coming up and with other things, but I think my gilliatt perspective, we stay focused on innovative medicine.
And making sure we have access programs on leaning into legislation that supports the innovative industry and that supports reducing patient out of pocket costs and that'll be our focus accordingly, selling so hope that gives a little bit of inside.
Super helpful. Thanks, Thanks to thank you.
We have the next question please.
Thank you for next question comes from the line of Tyler Van Buren with Piper Sandler.
A good afternoon, thanks for everything that you're doing and have a couple more room dusting. Your questions of course your experience your expertise and viral infections and all the natural history that you guys are collecting in real time, one to ask you about your best latest thoughts on the nature of <unk>.
Occurrence your base case assumes.
You know a peak potentially by July return in the fall and winter, but a lower impact. So is it possible provide a rough qualification of without lower impact might be and then also in subsequent years is this something that you would expect in that based taste to Peter out or to be with us for you know.
<unk> the next decade or two and then the second question is just pulling up on your earlier comments on F.D.A. interactions and potential pathways to approval, which was hopeful.
Have you guys had labeling discussions is there any color you could provide there.
<unk>.
Yep.
Yeah Okay.
Sure. It thanks, Tyler again for the comments and and you know I might ask if bandemer dad went to comment on the.
The first question, let me start with the second so yeah, we've been in constant dialogue with the agency on run under severe I I just have to really.
You know also say how thankful we are for for the F.D.A. and other members of the government knew chronic virus task force that it really made themselves available really literally all the time, when we need them and vice versa. So it's been it's been very.
Good collaborative relationship in terms of them disappear in the interactions with the F.T.A. I mean, we have then working with them on you know the submission they'd been open to a receiving parts of the submission which has been very helpful. Under a normal process plus there's the whole you eight classes.
I kind of goes on top of that so yes. The answer is and you you can imagine that obviously, that's been going on for weeks and actually a couple of months now but in the past 48 hours. It's increased men intensity. So we are and the team is in constant kind of information exchange with the agency right now and they're getting information.
From us obviously from N.I.H. on the N.D. trial, and there's a big sense of urging T. here I think F.D.A. understand.
The importance of reacting quickly to this and so it's it's intense right now and you know we think D.F.K. will move quite quickly on their decision.
The labeling side so back to.
The lower impact on the base case, I don't know where dad from a scientific perspective, Randy if you want to provide any other I think we don't have a crystal ball I guess [laughter]. Yeah, I think I think you know Tyler where where as much of consumer is a others. I think we are you know obviously our data are.
I'm trying to what's going on but we use for our modeling we use the external epidemiology data and and use that right now to get the broader picture. So I I don't think we have any.
Unique insights today that don't rely on on the same sources that everyone else. So that that's I think where we are obviously as as we capture more data maybe that will change, but today I think that's where we are and I'll just Alcoa, Dan said I I. This has been an unprecedented time in terms of our interactions with.
The regulators both here in the U.S. as well as outside the U.S., it's been really.
Impressive and truly collaborative.
Working with the N.I.H. and the F.D.A. in parallel Ah over the past you know couple of months.
We talk constantly and the same is true with the M.A., saying is true with Japan. You know, we're we're talking to all the regulators in in parallel. So it's been it's been a pretty unique situation and I think everyone understands the gravity. So that's been very helpful. In moving forward collaboratively.
<unk>.
<unk> yeah. Thanks to appreciate so we have time for one last question, where they operated we're going to have the last question that would be true.
Or last question comes from the line of filled <unk> with counting company.
Yeah.
Yeah, it's nearing thanks for 50 million and let me add my appreciation for your diligence an attack encoded two more two more questions on from disappear. The first is on the upcoming data from the simple trial. The the murder trial do in May.
Q remind is how the enrollment criteria and point definitions differed between the NIAD trial and that upcoming data set and and differ should we expect similar data or are they are notable differences.
And then second just to follow up question on Tyler's on the F.T. approval pathway down your your answer to terrorists. Christian suggests that you may not need any more data to get a formal F.D. approval deny a trial might be sufficient is that is that your current understanding of your F.D. a dialogue.
Yeah, I'll I'll, let my Dad also discussed so I, yeah, I I I'm just looked at discussions are still ongoing in terms of what's required for a a formal approval, but I I meant to infer earlier is you know denied data are.
Straight safety and advocacy at a highly statistical level right, which is usually the barrier for a full approval. So that's what we're working with.
And I don't want us I don't want to get ahead of the agency on that if that's okay. So but again I I do believe that there is most likely kind of a two step process, but potentially in the U.A. being granted and then moved onto the full approval, having said that can I can I turn to my dad, or Diana where dad. Okay on the first question.
Yeah, I I was actually going to see if Diana one answer that question. Okay. Yeah, that's great Diana Thank you.
Sure. Okay. Yeah. So in terms of entwined spend NIAD study looked at times to clinical recovery used a seven point scale and now we're now scale is really tracking crowd most of that major clinical trials right now, but as our understanding of the disease has evolved types of endpoint season.
On that scale has evolved so now I have changed kit time to chronicle recovery, which basically means no longer requiring medical care within the hospital getting off of oxygen or life, just charge and our moderate study.
We're looking we're using the aren't now scale as well, but we're looking at the day 11 distribution along that or no scale. So similar q., what we did and our severe steady but looking at they 11, instead update 14, recognizing that we're looking at a population.
And that's less SEC <unk> city is looking at patients who are hospitalized, but they're not hypoxic, they're not requiring oxygen than I had study enrolled patients from starting there, but all my trip mechanical ventilation, so slightly different on points for slightly different patient populations and.
<unk> really looking at different questions were looking at state maturation and they're looking at primary safety in Africa state with people control.
That's helpful. Thank you.
Thanks, a lot fill so it that I think we'll turn the call over to the dog too close but.
Let me just let me to say thank you very much to all of you and and we really appreciate your trust and confidence and Gilliatt and we'll continue to do our best throughout what we do for patients uncertain next recovered 19, so with that like do you want to.
Blacksburg.
Thank you done and thank you will for joining US today. We appreciate your continued interesting <unk> and the team here look sports, providing you with update porno future program.
Yeah.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect.
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